Senate OKs $9.9B state operating budget

JUNEAU — The Alaska Senate passed a $9.9 billion state operating budget Thursday, turning aside minority-led efforts to add in more money for things like education.

Reconsideration notice was served, meaning the budget could face another vote before moving to the House. If the House doesn’t agree to changes made by the Senate, the bill will go to a conference committee.

Thursday’s 16-3 vote followed numerous failed attempts by minority Democrats to amend the bill. Proposed amendments included adding $60 million toward K-12 education, transferring $2 billion from reserves into the Permanent Fund, which is far more difficult for lawmakers to get access to than other state savings accounts, and reducing or eliminating funding for the Knik Arm Bridge and Toll Authority.

The authority was created by the state 10 years ago to build a bridge connecting Anchorage and the Matanuska-Susitna Borough. Supporters have argued the project would create new opportunities for business development and could pay for itself. But questions have been raised about the need for the project and the possible obligation to the state.

Sen. Anna Fairclough, R-Eagle River, said an audit on the authority is pending, and she urged lawmakers to wait to see what that entails before making a decision.

Voting against the bill were Anchorage Democratic Sens. Johnny Ellis, Bill Wielechowski and Hollis French. French commended the work that had gone into the package but said he was disappointed it didn’t add more for education.

Sen. Pete Kelly, co-chair of the Senate Finance Committee, said lawmakers need to support education and back that up with funding. Since 2005, per-pupil support has gone from $12,000 to $22,000 this year, with 1,900 fewer students enrolled in the public school system, he said.

Kelly, R-Fairbanks, said the issue goes beyond whether the base-student allocation, the amount the state guarantees districts for every student enrolled, is inflation-proofed, as the $60-million amendment proposed by French sought to address.

He reiterated that senators are committed to looking at a larger education package and figuring out K-12 education needs and what’s working or not.

Kelly told reporters later there are three specific budget areas that he’s most concerned about — education, health and social services and employee costs.

“That’s where the meat of the budget is,” he said, adding that you “can’t sidestep entitlements” and think you will get a smaller budget. Subcommittees plan to do work in the interim, studying those specific areas and getting public buy-in for some of the changes that will be needed, he said.

“We have to slow this thing down,” he said of the state’s overall spending. “It’s just ballooning, and we have to be the people who say, This far, and no farther on the budget.”

Thursday’s vote came one day after Gov. Sean Parnell proposed an overall spending cap of about $6.8 billion in unrestricted general funds. That designation refers to money that isn’t restricted in its use by the law, constitution or other things. Authorized spending for this budget year includes about $7.9 billion in unrestricted general funds, according to Parnell’s budget director.

The operating budget passed by the Senate included $5.8 billion in unrestricted general funds. Parnell has proposed $799 million in unrestricted general funds for the capital budget.

The Senate has yet to unveil its version of the capital budget and isn’t obligated to include all Parnell’s projects.

Kelly’s Finance co-chair, Kevin Meyer, said the capital budget will be much smaller than Alaskans have seen in recent years. Meyer, who oversees the capital budget on the Senate side, said he’s looking at a geographic balance in projects, what projects might be critical, moving away from smaller projects, like playground equipment, finishing projects that are already under way and maintaining assets.

Oil revenue provides about 90 percent of the state’s unrestricted revenue. Forecasts call for continued production declines, and the state is facing the possibility of having to dip into savings to cover costs for this budget year.

Parnell has proposed cutting oil taxes as a way to boost production. The latest version of that proposal, which passed the Senate last week, could cost the state up to $875 million next fiscal year alone. There is an expectation that savings — totaling about $16 billion between two reserve funds — will be used to absorb the near-term hit, with a hope, as Kelly said, “to get out the other side and find that there’s more money.”